When this is set to true, any occurrences of <cross-domain-policy> in sanitised output will be altered to <NOT-cross-domain-policy>. Without this, an attacker can potentially send their own Adobe cross-domain policy unless it is prevented by the crossdomain.xml file at the domain root.

You should only set this to false if you have a crossdomain.xml file in the root of your website (e.g. http://example.com/crossdomain.xml).